Difference Between Bribery and Extortion and their Effect on Business Decision

There has been a misconception about the meaning of the two terms – bribery and extortion. Some say they are one and the same words, others say they are different, but their definition could not clearly describe the actual meaning of the words and their differences.

Bribery is an act of offering something valuable to someone to persuade them to act in way that benefit the giver. In this case, the person bribing, offer either money or other valuable materials or goods to induce the bribe taker to grant the wish of the bribe giver. In the case of extortion, it means obtaining something valuable by means of using force or threats. In this case, the extortionist gives little or no option to their victims. Extortionist could use threat of either bodily harm to both the victims or the family, loss of property or any other means to ensure their victims succumb to their demand.

Now that we have seen the meaning of the two terms, we could clearly understand the difference between the two. In the case of bribery, both the giver and the taker have a benefit that would accrue to them individually. To illustrate the differences, we would make example with two companies – company A and company trying to win a procurement contract from company C. Company A has all the requisite skill to execute the contract having done contract of similar size and complexity previously, company B which was formed one year ago without any requisite skill and haven’t executed contract of similar magnitude before. Company B’s Managing Director offered procurement manager of Company C, 30% of the contract sum as a kickback if the procurement Manager of company C offer the contract to company B knowing fully well that they don’t have capacity to execute the contract. If the procurement manager of company C ended up given the contract to Company B instead of company A, both company B managing director who would benefit from getting the contract and the procurement Manager of company C who would enjoy 30% kickback stand to benefit from the transaction. This scenario clearly explain bribery. On the flip side, if the procurement manager of company C came to company A and said yes, you are more qualified to execute this contract but without giving me a kickback of 30% of the contract sum, you are not getting the contract. So, in this case, the procurement manager uses threat of contract denial to get company A to offer him 30% kickback. The benefit in this case only accrue to the procurement manager and not to company A.

These two scenarios should be clearly understood by a business leader when making a decision. Threat of extortion could be veil in some occasions while in others, it’s as clearly as eyes can see. In some case where brute force is used to extort, it is advisable to comply to save self from harms way. Where extortion conflict with an ethical stand of a company, management should decide to either remove the threat altogether or to minimize it.